On Friday, Surgery Partners Inc . (NASDAQ:SGRY), a leading healthcare services provider, received a positive outlook from Macquarie, as the firm initiated coverage on the company's stocks. The analyst assigned an Outperform rating to the company, with a price target set at $31.00, indicating confidence in the company's performance potential.
The analyst at Macquarie highlighted the evolving landscape of surgical procedures, noting that innovations in anesthesiology and less invasive techniques are increasingly allowing surgeries to be performed in outpatient settings. This shift is expected to reduce the need for overnight hospital stays and is seen as a catalyst for consistent volume growth for operators of ambulatory surgery centers (ASCs).
The report further anticipates a favorable growth in rates for ASCs as they offer a cost advantage, with payors saving an average of 40% for similar procedures when compared to hospital outpatient departments (HOPDs). This cost efficiency is projected to drive organic revenue and provide high visibility compared to other healthcare services providers.
Surgery Partners operates in an industry where the trend towards outpatient surgical services is growing. The company is expected to benefit from the broader shift of surgical procedures moving from traditional hospital settings to ASCs, which aligns with the push for cost-effective healthcare solutions.
The Outperform rating by Macquarie reflects a positive outlook on Surgery Partners' ability to capitalize on these industry trends and suggests potential for the stock to perform well in the market.
In other recent news, Surgery Partners has experienced robust growth in the first quarter of 2024, with net revenues reaching approximately $717 million, a 7.7% increase year-over-year. The growth was even more significant on a same-facility basis, with a 10.2% rise. The company's focus on higher acuity procedures and successful physician recruitment, notably in orthopedics, where total joint replacements surged by 54%, contributed to this performance.
Surgery Partners has raised its full-year net revenue and adjusted EBITDA forecasts to at least $3.05 billion and $505 million, respectively. It also anticipates closing on $200 million to $250 million in acquisitions in the second quarter. These are recent developments that highlight the company's strong Q1 growth and positive outlook for the year.
At the 2024 Annual Meeting of Stockholders, several key proposals were approved. Shareholders elected all Class III director nominees, approved the compensation of the company's named executive officers, and endorsed the employee stock purchase plan. The appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024, was also ratified.
InvestingPro Insights
Following the optimistic outlook from Macquarie on Surgery Partners Inc. (NASDAQ:SGRY), InvestingPro data and tips provide additional insights into the company's financial health and stock performance. The market capitalization of Surgery Partners stands at approximately $2.98 billion, underscoring its significant presence in the healthcare services sector. Despite being a non-dividend-paying company, Surgery Partners has demonstrated a robust return over the past five years, which could be indicative of its growth potential.
InvestingPro data shows that the company's revenue has grown by 7.1% over the last twelve months as of Q1 2024, with a quarterly growth rate of 7.69%. This aligns with the industry trends mentioned by Macquarie, as more surgeries move to outpatient settings. The gross profit margin of nearly 24% suggests that the company is maintaining a healthy profitability ratio, which is crucial for its long-term sustainability.
Among the InvestingPro Tips, it's noted that analysts predict the company will be profitable this year, which may reassure investors looking for stable earnings. Additionally, the company is trading at a high earnings multiple, with a P/E ratio of 3,453.49, reflecting high investor expectations for future earnings growth. While the stock price has experienced volatility, with a one-year price total return of -45.42%, the projected growth in net income and the shift towards cost-effective outpatient surgeries could provide a favorable outlook for investors.
For those considering an investment in Surgery Partners, there are additional InvestingPro Tips available that could further inform your decision. Remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering you even more insights and analysis to guide your investments.
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